Consider a 4-period binomial tree model of the American put option on the XYZ stock with K=$40 and T= 0.5 years. The current stock price is $40 and the volatility is 20%. The annul interest rate is 8%. There is no dividend. What is the option premium from the tree? And how many early exercise nodes are there?

Answer rating: 100% (QA)

Solution Calculating the option ... View the full answer